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Todays share price of Apple is $120. You think Apples stock will fall over the next 3 months. Today you observe the following option prices
Todays share price of Apple is $120. You think Apples stock will fall over the next 3 months.
Today you observe the following option prices (all expiring in 3 months):
Option 1: Put Option Premium = $4; with a Strike Price = $110
Option 2: Put Option Premium = $2; with a Strike Price = $100
Today you buy Option 1 and sell Option 2; (i.e. bear put spread). At expiration the stock price equals $106. What is your profit or loss (on a per share basis)? A) A loss of $4 B) A loss of $2
C) A profit of $2 D) A profit of $4 E) A profit of $6
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